Talking Money with Your Aging Parents

My (Daria here) grandfather used to say it was improper for grown-up children to talk about finances with their aging parents because, as he put it, "You don't pluck a chicken before it's dead."

He paid the price for staying "un-plucked." We had no idea what was in his estate until after he died. But his biggest mistake was making the assumption that he was going to die before his wife, my grandmother, who was six years younger.

In those days—we're talking late 1960s—there was a cap on how much money could pass to your spouse without incurring estate taxes. That is no longer the case. But at the time, he tried to protect his wife from estate taxes by putting all of his assets in her name. As it turned out, she died first— which meant he inherited an estate that paid taxes on his own money!

You, as an adult child (let's hope more adult than child) need to know what your parents have done vis-à-vis their estate planning, as well as the state of their finances and insurance. Why? Because you never know what might happen tomorrow.

A Growing Problem

Becoming a "parent of a parent" is an emotional reality for millions of Americans. Many baby boomers are spending more time and money taking care of aging parents, and you can expect to see more and more of this in the coming years. It's estimated that almost 45 million Americans already take care of their family and friends. By 2030, one-fifth of Americans will be 65 or older.

Sometimes the parent lives nearby, which is obviously a help. Other times, he or she is not so close and the caregiver struggles to manage that geographic gap. More than 5,000,000 caregivers – defined as anyone providing care or support to an aging or disabled parent – live at least an hour (some much farther) from the person that they are assisting, according to a survey by AARP and The National Alliance for Caregiving. It's estimated that caregivers provided $350 billion worth of care in 2006.

For us, we're fortunate in that my mom, now in her early 80s, lives close to us and is currently in excellent health. Eventually, though, she may need some special care.

Others aren't so lucky. We recently read a story about a high school student who had to leave school three times per day to care for his grandfather, who is living with the family. The student's mother and father worked quite a distance from home and, consequently, couldn't come home during the day.

Caring for an elderly parent can take a toll on the health of the caregiver and put a financial and emotional strain on other members of the family. To compound the situation, elder care is shifting back to the family's home because of the spiraling costs of nursing homes. The average cost for a nursing home is now $67,000 per year. Assisted-living facilities are cheaper but still expensive at about $35,000 per year. Even the cost of a home health care aid is $19 per hour, according to a report from Met Life's Mature Market Institute.